Business Ethics

What are business ethics?

Business ethics, or corporate ethics, is the application of certain moral values within a professional context, or business environment. Business ethics are, broadly, the moral framework which governs how one might achieve professional success without violating the widely held principles of honesty, integrity, trust, and fairness.

What are ethical issues in business?

Common ethical issues businesses must confront are conflicts of interest, issues of employee behavior, and managing client relations.

What are conflicts of interest?

A conflict of interest is a situation where an individual, group, or organization must navigate the demands of mutually incompatible interests that could corrupt what would otherwise be a normal decision-making process. An example might be a sales associate motivated by a financial commission to sell as many products as possible, but there also being a fiduciary responsibility to those products themselves. When faced with a client who wants to buy the product, but it is not in their best interest to do so, the associate is faced with an ethical dilemma: Sell the unneeded product and profit, or uphold fiduciary responsibility and fail to make the sale?

What is social responsibility?

Social responsibility is a concept within business ethics that involves how an organization—but particularly a business—might serve the betterment of the public at large while still achieving its business goals. Social responsibility often involves how an organization’s actions might impact certain groups of people or the environment, for example.

What is a code of conduct?

A code of conduct is a formal statement of expectations made by an organization to its members or employees of how they are to live up to the highest values of the organization. In many cases, a company’s code of ethics is not meant just to promote moral and high-minded behavior, but in so doing, to provide a valuable risk management service by discouraging and prohibiting the kinds of unethical behavior—such as insider trading or discrimination—that could result in regulatory or legal liabilities.

A recent report from the Financial Reporting Council offers guidance to board chairmen on how to promote corporate culture. The report advises boards to align values, exercise steardship, and demonstrate leadership, among other steps. Paul Hodgsonprovides an in-depth look.

The Institute of Business Ethics this week announced that it has appointed four new trustees to join the Trustee board, chaired by Edward Bickham. The new trustees replace recent retirees, as well as augmenting the skills and experience of the Trustee board. Details inside.